Bitcoin Is Not a Security

"Bitcoin is decentralized... It is designed to be a payment system replacement for sovereign currencies. We've determined that doesn't have the attributes of a security.... A far as I am concerned, that's designed to be akin to the dollar, the yen, the euro... and operates that way... People who purchase it expect it to operate that way. And it's not centrally created or distributed. Glenn Hutchins does not own the right to produce more bitcoin."

What Is a Security?

"In the public offering space, the drafters of the 1933 Act" were very careful not to have a very narrow definition of a security because they understand that if they did so, people would easily be able to find loop-holes.

"So, what is that definition of security? One aspect of that definition, people refer to it as an investment contract, but it's when I as investor give you my money with an expectation of a return based on your efforts and the efforts of your affiliates... and a return that I either get through your efforts and distribution... or I get because I trade in the secondary market. Which brings me to the second aspect of securities laws. When we have open public trading and it's done through a matching of buys and sells, and the person/entity doing that matching of buys and sells has to register as an exchange or also find an exemption from registration as an exchange. So, you can have private exchanges but they have to stay within our well-known exemptions for that type of activity. If you're going to have a public broad exchange of securities, you have to register as an exchange."

"When a story of value becomes truly decentralized, that means not one person or group of people controlling its supply or controlling its trading."

As an aide, it is worth noting that every new security must be either registered with the SEC or be exempt under Regulation D or Regulation S.

By Default, Every ICO Token Is a Security

"If what you are doing is starting a venture and you are funding that venture by issuing tokens, you should start with the assumption that you are conducting a securities offering. I think that's a better way to look at it. Start with that assumption, and say 'Am I conducting a private placement or am I going to do a public offering?' I have to understand that comes with significant obligations."

"Let's be realistic. Look at it from the investor's perspective. What is in it for the person purchasing the token? Are they doing this in the same way that they would invest in a new company that was issuing stock or are they doing it as somebody who purely wants to use it?"

No comment from Chairman Clayton on whether or not XRP is a security, except: "I think I'll go back to what I said [earlier]. We are open to people coming in to see us, engage with us, discuss their particular situation, and work through it with us... Some of these questions, you know, require a lot of information in order to get to a definitive position... Many are very obvious. I am selling you my token, I'm going to go off, produce a venture, hopefully you'll get a return for having purchased that token."

Dealing With Projects With ICOs That Violated Securities Laws

On the subject of the recent enforcement actions against Paragon and Airfox: "What was clear from these actions was that these offerings were conducted in a way that was not compliant with the registration requirements. They were securities offerings... they were being sold in a way that was not consistent with the private placement exemptions... they were public offerings, and they were not registered with us, and you know, when that happens, we have the right to bring actions, which we did, and investors have remedies... One of those remedies is the obligation of the offeror to buy back the securities at the price they were sold... otherwise known as recision, and these settlements embody that concept."

"But people should understand that this was the remedy in this particular case, but remedies in future cases may be different... get your act together!"

No Crypto ETF Approval Until No Market Manipulation and Adequate Custody Solution

"What investors expect is that the trading in that commodity that is underlying the ETF is trading that makes sense, is free from the risk or significant risk of manipulation. Another thing they really care about, [that] we really care about, is that the assets underlying that ETF... that you have good custody of it, that it's not going to disappear, that the risk in the ETF is truly the risk in the value of the underlying asset, it's not the risk of theft or disappearance. Those two issues are important to me to get comfort on before we would allow an ETF with a digital currency underlying it to go forward."

PayPal is Cautiously Optimistic About Partnership with Libra Association

Payment platform was one of the first companies to join and support the Libra Association.

Payment platform PayPal is cautiously optimistic about its relationship with Facebook’s digital currency libra, despite being the highest-profile company to join the Libra Association.

PayPal Backs Libra Association

In June, shortly after the official unveiling of Facebook’s libra, PayPal announced an intention to join and support the Libra Association, a collection of tech and finance companies promoting the product.

At the time, PayPal billed the digital currency as a revolutionary product for people around the world,

We believe in democratizing participation in the digital economy for people from all walks of life, and businesses of all sizes.

However, PayPal appears cautious about its future with Facebook’s digital currency. PayPal investor relations vice president Gabrielle Rabinovitch reiterated Sept. 12 that the company is a non-binding agreement with libra,

It's a non-binding commitment. And obviously, I think there's a lot of work to happen before we get to that point where it becomes something more than just a very exciting idea.

She added,

The goals and ambitions of Libra are very consistent with PayPal's overall ambitions in terms of serving the underserved; democratizing access to capital. So we very much believe in the potential of Libra.

While PayPal appears optimistic about the future of libra, the digital currency has endured months of regulatory and political scrutiny concerning its release.

Earlier in the week, senior U.S. Treasury official Sigal Mandelker told an audience in Geneva that libra would be held to the highest standard of regulatory compliance in order to combat money laundering and terrorist funding.